Problems  in  the  Management 
OF  A  Railway  System. 


JOHN  T.  Brooks. 


YOU  wish  to  know  something  of  the  prac- 
tical management  of  railways.     I  might 
ask,  How  is  a  university  or  a  shop  man- 
aged ?    Universities  and  shops  are  not  all  man 
aged  alike,  neither  are  all  railways.    The  man- 
agement of  railways,  as  of  shops  and  universities, 
depends  on  the  amount  of  work  they  have  to  do 
and  the  kind  of  men  who  manage  them.    A  sys- 
tem which  controls  large  mileage  and  a  large  vol- 
ume of  traffic  naturally  requires  more  diversified 
and  thorough  organization  than  one  whose  mileage 
and  traffic  are  small.    When  the  business  of  a 
railway  is  not  too  large,  an  intelligent,  energetic 


President,  aided  by  proper  assistants,  may  direct 
all  its  affairs ;  but  there  are  few  railways  whose 
affairs  can  be  so  managed.  Generally  speaking, 
the  railway  of  to-day  is  a  combination  of  several 
lines  ;  its  traffic  is  large  ;  its  business  is  closely 
blended  with  that  of  other  lines ;  its  income  is 
affected  by- the  operation  of  rival  lines.  Hence 
arises  the  necessity  of  organization  ;  a  classifica- 
tion of  duties,  and  a  general  supervision  of  policy 
by  a  principal  executive  officer,  details  being  man- 
aged by  associates,  each  responsible  for  the  opera- 
tion of  his  own  department. 

The  success  of  railway  administration  depends 
on  two  principal  factors :  wise  policy,  careful  at- 
tention to  details.  Herein  is  apparent  the  neces- 
sity of  wise  men  in  control.  The  measure  of  their 
wisdom  is  the  measure  of  success  of  the  railway. 

The  railway  system  of  the  United  States  is  the 
product  of  evolution. 

First,  in  the  mode  of  creation.  Originally  rail- 
way companies  were  created  by  special  charter. 
This  means  that  a  State  Legislature  enacts  a  law 
declaring  that  the  persons  therein  named,  their 


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successors  and  assigns,  are  made  a  corporation, 
with  power  to  build,  operate  and  maintain  a  rail- 
way between  designated  points ;  other  specific 
powers  being  granted,  such  as  the  applicants  for 
the  charter  wish  to  have,  or  as  the  law-making 
power  is  willing  to  grant.  Two  evils  resulted 
from  this  mode  of  creating  a  railway  corporation  ; 
first,  applicants  for  a  charter  wished  to  obtain 
special  and  valuable  privileges,  for  which  in  many 
cases,  they  were  willing  to  pay  money.  Hence 
resulted  bribery  of  law-makers  and  sacrifice  of 
public  interests.  Next,  special  laws  creating  rail- 
way companies  were  necessarily  of  great  length  ; 
they  conferred  generally  the  same  powers  and 
privileges;  as  applications  for  charters  became 
numerous,  and  were  generally  granted,  the  statute 
books  became  swollen  to  large  size  and  many  vol- 
umes. Thereupon  constitutions  were  adopted  in 
most  States  requiring  all  corporations  to  be  created 
under  general  laws,  and  forbidding  special  powers 
to  be  given  to  any.  Thus  a  system  of  laws  re- 
lating to  railways  has  been  developed  in  nearly 
every  State,  prescribing  in  general  terms  the 


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mode  in  which  all  companies  must  be  created, 
and  the  powers  which  all  may  enjoy.  A  corpo- 
ration is  spoken  of  as  a  creature  of  law ;  also  as 
a  legal  entity.  These  terms  are  sometimes  con- 
fusing. A  corporation  is  a  number  of  persons 
associated  together  for  some  purpose  recognized 
by  law,  and  permitted  by  law  to  do  certain  things 
on  certain  conditions.  The  privileges  granted  to 
persons  thus  associated,  aside  from  the  special 
object  of  their  association,  are  chiefly  these : 
They  may  transact  business  under  one  name, 
selected  by  themselves ;  they  may  sue  and  be 
sued  in  that  name,  and  they  and  their  successors 
and  assigns  may  continue  to  do  business  for  a  long 
period  or  forever.  The  death  of  one  member 
does  not,  as  in  case  of  a  partnership,  terminate 
the  corporation.  The  powers  and  privileges  en- 
joyed by  railway  companies  are  called  franchises. 
This  word  is  a  mystery  to  many  people.  A  fran- 
chise is  merely  a  right,  conferred  by  law,  to  do  or 
have  some  particular  thing. 

The  second  step  in  the  evolution  of  the  railway 
system,  consists  in  consolidation  and  the  acquisi- 


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tion  of  additional  lines.  I  have  said  that  origi- 
nally a  railway  company  is  created  to  build  and 
operate  a  railway  between  designated  points,  as 
between  *'A''  and  '*B/'  So  great  has  been  the 
multiplication  of  railways  in  modern  times,  so 
fierce  has  been  the  rivalry  between  them,  so  great 
has  been  the  necessity  of  giving  the  public  the 
best  service  at  the  lowest  possible  cost,  that  lav/s 
have  been  enacted  from  time  to  time,  permitting 
one  railway  company  to  lease,  operate  or  buy  ad- 
ditional railways ;  also  permitting  two  or  more 
railway  companies  to  consolidate  and  become  a 
single  company.  There  can  be  no  question  that 
the  policy  which  permits  consolidation  of  railway 
companies  is  a  wise  one.  Passengers  and  freight 
can  be  carried  long  distances  without  change  of 
cars,  in  quicker  time,  and  at  less  cost ;  yet  many 
people  fear  large  railway  companies,  and  believe 
newspapers  and  stump  speakers,  who  say  that 
these  large  companies  are  a  menace  to  the  people. 
There  is  no  ground  whatever  for  this  fear. 

A  large  railway  company  has  no  other  or  greater 
powers  than  a  small  one.    A  large  company  does 


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more  business  than  a  small  company,  but  both  do 
the  same  kind  of  business,  in  the  same  way. 
You  can  bring  a  large  company  into  court,  before 
a  Justice  of  the  Peace  or  an  Alderman,  as  easily 
and  as  surely  as  a  small  one.  No  railway  com- 
pany however  large,  dares  disobey  the  order  of  a 
magistrate.  If  it  be  said  that  a  large  railway 
company,  in"  receipt  of  a  large  income,  can  bribe 
public  officials,  more  easily  than  a  small  company, 
two  answers  may  be  given :  First,  elect  officials 
who  can  not  be  bribed ;  the  people  always  have 
this  remedy  in  their  hands.  Second,  the  resources 
of  a  small  railway  company  are  ample  to  bribe  an 
official,  if  he  is  willing  to  be  bribed.  The  millions 
of  a  large  corporation  are  not  needed  for  this  pur- 
pose. Put  these  facts  to  the  next  man  you  hear 
talking  of  the  danger  of  large  railroad  combina- 
tions. 

The  third  step  in  the  evolution  of  the  railway 
system  is  the  object  for  which  a  railway  is  con- 
structed. Years  ago,  railways  were  built  because 
they  were  needed.  People  wanted  easy  access 
to  markets  where  they  wished  to  buy  or  sell  ; 


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they  subscribed  money,  applied  it  as  far  as  it 
would  go,  and  borrowed  what  was  needed  to  com- 
plete the  railway.  In  modern  times,  many  rail- 
ways are  built  not  because  they  are  needed,  but 
because  certain  men  wish  to  make  money  by 
building  them.  They  win  or  lose  in  proportion  as 
they  induce  the  public  to  buy  the  stocks  and 
bonds  they  issue.  It  has  long  been  the  policy  of 
the  law  to  limit  the  amount  of  stock  and  bonds  a 
railway  company  may  issue,  to  the  necessary  and 
reasonable  cost  of  construction.  But  the  law  has 
not  yet  become  wise  enough  to  limit  the  amount 
which  may  be  issued  for  the  purchase  of  a  rail- 
way. Hence,  the  exploiters  of  balloon  railways 
organize  two  companies  :  First,  a  railway  com- 
pany ;  second,  a  construction  company.  Then,, 
as  a  railway  company,  they  contract  with  them- 
selves as  a  construction  company,  and  agree,  as  a. 
railway  company,  to  issue  a  certain  amount  of 
bonds  and  stock,  and  deliver  all  these  bonds  and 
stocks  to  themselves,  as  a  construction  company, 
to  pay  for  building  the  railroad.  There  is  no  re- 
lation whatever,  between  the  cost  of  the  railway 


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and  the  amount  of  bonds  and  stock  they  take  for 
building  it,  except  that  universally  the  latter 
largely  exceed  the  former.  These  promoters  sel- 
dom expect  to  make  money  by  operating  the  rail- 
road. If  they  succeed  in  selling  to  an  ignorant 
publrc  the  bonds  and  stock  they  have  issued,  then 
in  a  short  time  the  public  loses  its  money  ;  or  if 
the  promoters  do  not  succeed  in  unloading  on  the 
public  their  bonds  and  stocks,  then  the  loss  falls 
on  themselves,  and  they  have  their  railroad  and 
their  pains  for  nothing. 

A  railway  once  built,  though  yielding  nothing  to 
its  owners,  is  seldom  destroyed.  It  passes  from 
one  stage  of  reorganization  to  another,  always  on 
a  downv/ard  scale,  until  it  reaches  a  level  where 
its  income  may  be  sufficient  to  keep  it  in  opera- 
tion. Meanwhile,  in  its  efforts  to  avoid  repeated 
bankruptcy,  it  cuts  rates,  carries  passengers  and 
freight  at  a  loss,  and  in  the  process  impoverishes 
and  sometimes  destroys  the  value  of  other  railway 
properties. 

Public  opinion  in  this  country  has  not  yet 
reached  the  stage  of  protecting  people  who  have 

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invested  their  money  in  railways  which  serve  the 
public,  by  preventing  the  construction  of  new  rail- 
ways which  are  not  needed.  But  people  will  some 
day  see  the  folly  of  permitting  speculators  to  take 
other  men's  land  and  encumber  streets  and  high- 
ways with  a  useless  railroad,  merely  to  make 
money  for  themselves;  and  some  day  they  may 
think  it  wise  to  protect  the  public  against  worth- 
less railway  stocks  and  bonds,  as  they  now  protect 
it  against  quack  lawyers,  doctors,  foods  and  medi- 
cines. 

The  functions  of  a  railway  company  are  two- 
fold :  First,  to  serve  the  public  by  carrying  people 
and  freight ;  second,  to  yield  income  to  its  ov/ners 
by  doing  so.  The  public,  no  less  than  railway 
officials,  often  lose  sight  of  the  mutual  duties  and 
responsibilities  which  come  of  this  relationship. 
The  public  should  be  well  served  by  railway  com- 
panies. This  means  that  trains  should  be  moved 
safely,  punctually  and  at  reasonable  rates.  On 
the  other  hand,  the  public  should  allow  capital 
thus  employed  in  its  service  to  receive  fair  in- 
come.   How  many  persons  ever  think  of  this? 


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Hostility  to  railways  has  come  from  a  variety 
of  sources :  First,  the  owners  of  a  railway  are 
usually  numerous,  widely  scattered  and  unknown. 
Hence,  in  dealing  with  it,  the  public  loses  the  sense 
of  personal  relationship  which  is  usually  observed 
in  dealing  with  individuals.  Men  are  often  re- 
strained from  doing  wrong  to  an  individual,  because 
he  is  personally  known,  or  they  know  that  incon- 
venience, loss  and  possibly  ruin,  would  follov/  their 
wrongful  act.  On  the  other  hand,  the  shipper  who 
gives  false  weights,  the  passenger  who  sneaks  his 
way  on  a  train,  the  tax  commissioner  who  levies 
an  intolerable  assessment,  the  law-maker  who  in 
one  session  adds  to  the  expenses  and  cuts  down 
the  income  of  railways,  the  jury  that  gives  ex- 
cessive damages  against  a  railroad  company,  re- 
gard the  particular  theft  or  award  they  are  guilty 
of  as  a  mere  moiety  compared  with  the  gross  earn- 
ings of  a  railway  company.  They  have  no  idea 
of  injurious,  personal  loss ;  nor  do  they  consider 
that  the  number  of  shippers,  passengers,  tax  offi- 
cials and  juries  who  are  doing  precisely  as  they 
are  doing  is  infinite,  and  the  result  to  railways 
destructive. 

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Next,  railways,  by  reason  of  the  large  capital 
they  represent,  the  magnitude  of  their  operations,, 
the  vast  number  of  persons  employed,  create  a 
jealousy  of  their  operations  which  is  distinctly 
human.  The  personal  friendship  which  subsists 
between  employer  and  employe  when  they  v/ork 
side  by  side,  is  wanting  in  the  case  of  a  railway 
company.  In  the  earlier  period  of  railways,  their 
ofificers  were  sometimes  arbitrary,  inconsiderate 
and  unjust ;  their  employes  were  often  careless, 
impudent  and  rude.  If  freight  was  delayed,  dam- 
aged or  lost,  a  long  time  elapsed  before  compen- 
sation was  paid.  When  persons  were  injured, 
managers  did  not  accept  the  theory  of  the  injured 
party,  hence  arose  mutterings,  law  suits,  and  re- 
vengeful feelings.  Persons  involved  in  these 
various  mishaps  did  not  make  fine  distinctions  as 
to  their  causes.  If  brakemen  were  insolent,  the 
passenger  did  not  consider  that  when  employes 
are  counted  by  thousands  it  is  impossible  to  se- 
cure a  gentleman  in  every  employe.  Shippers 
did  not  consider  that  human  beings  serving  as  rail- 
way employes  make  mistakes  the  same  as  other 


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men  ;  nor  the  more  important  fact,  that  when 
claims  for  damages  amount  to  thousands,  each 
must  be  adjusted  in  the  order  of  presentation. 

Gradually  railway  companies  have  emerged 
from  the  feudal  stage  of  administration  ;  competi- 
tion has  made  their  managers  less  arbitrary ;  or- 
ganization has  secured  promptness  in  settlement 
of  claims  ;  experience  has  taught  that  railway 
companies  have  many  points  to  overcome  before 
they  have  an  even  chance  with  a  private  individ- 
ual before  a  jury.  The  result  is  that  under  wiser 
policies  lawsuits  diminish  in  number,  settlements 
without  suit  increase,  and  the  causes  of  prejudice 
gradually  disappear. 

hi  the  practical  administration  of  a  railway  the 
daily  object  in  view  is  the  same  as  in  any  other 
kind  of  business — increase  earnings ;  reduce  ex- 
penses. Formerly,  when  railroads  were  local  af- 
fairs, with  limited  mileage  and  traffic,  the  Presi- 
dent was  usually  a  prominent  business  man, 
banker,  lawyer  or  capitalist,  hi  those  days  busi- 
ness came  unbidden  to  the  company.  All  the  lat- 
ter had  to  do  was  to  exercise  judgment  on  ques- 


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tions  of  policy,  aided  by  experts  in  matters  of 
construction,  operation  and  traffic.  These  primi- 
tive methods  have  gradually  given  way  to  changed 
conditions.  Railways  have  multiplied,  extended, 
consolidated ;  separate  lines  have  been  amalga- 
mated into  a  single  system.  There  is  hardly  a 
fractional  point  of  the  compass  to  which  one  or 
more  railways  is  not  directed ;  traffic  no  longer 
flows  in  natural  channels.  It  is  invited,  solicited, 
bought  and  fought  for.  Under  these  conditions, 
organization,  classification,  subdivision  of  duty  is 
the  order  of  the  day.  Each  department  has  its 
specially  trained  em.ployes,  most  of  them  having 
spent  their  lives  in  railway  service.  Every  year 
the  management  and  operation  of  railways  be- 
comes more  and  more  a  distinct,  technical  profes- 
sion. 

A  majority  of  railways  derive  from  one-half  to 
three-fourths  of  their  earnings  from  freight  traffic. 
A  few,  leading  to  summer  and  winter  resorts  or 
between  large  cities,  find  their  main  income  in 
passenger  traffic,  hi  any  event,  modern  condi- 
tions require  a  freight  department  and  a  passenger 


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department  to  secure  traffic ;  an  operating  and 
maintaining  department  to  haul  the  traffic  ;  '  a 
treasury  department  to  receive  and  keep  the 
money  that  is  earned  ;  an  accounting  department 
to  show  whence  the  money  comes  and  whither  it 
should  go,  and  a  law  department  to  give  daily  and 
hourly  advice,  prepare  deeds,  contracts  and  mort- 
gages, and  especially  protect  the  company's  rights 
when  the  same  are  involved  in  litigation. 

For  the  purpose  of  securing  traffic  the  freight 
and  passenger  departments  are  conducted  on  a 
basis  similar  to  that  of  wholesale  commercial 
houses.  Territory  in  which  the  system  is  located, 
territory  beyond  either  terminal  and  on  either 
side  of  the  main  line,  is  divided  into  districts,  each 
in  charge  of  division  agents,  each  supplied  with 
solicitors  for  traffic, who  travel  from  town  to  town, 
from  city  to  city,  and  in  cities  from  house  to  house, 
in  search  of  persons  who  wish  to  travel  or  have 
something,  carried.  This  army  of  men  working 
to  secure  traffic  is  in  hourly  communication  with 
superior  officers  by  mail,  telegraph  and  telephone. 
The  typical  passenger  agent  persuades  people  to 


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travel  by  his  line  who  neither  wish  nor  need  to 
travel.  The  typical  freight  agent  represents  a 
line  which  carries  so  safely,  swiftly  and  cheaply 
ahead  of  all  competitors  that  even  dead  freight 
rejoices  in  the  prospect  of  traveling  over  it. 
Sometimes  the  cost  of  securing  traffic  exceeds  all 
income  that  is  derived  from  carrying  it. 

Closely  allied  to  the  question  of  earning  money 
is  the  question  of  earning  it  at  least  possible  cost. 
Herein  are  involved  matters  of  operation  and  main- 
tenance. The  pole  star  of  train  movement  is  high 
speed  and  safety.  Transportation  is  merely  means 
to  an  end.  A  person  at  A.  has  business  at  B.; 
he  wants  to  go  from  A.  to  B.  as  fast  as  he  can 
and  get  back  as  soon  as  he  can,  but  he  wants  to 
go  and  come  without  injury.  Freight  traffic  not 
wanted  at  A.  is  wanted  at  B.  Capital  invested 
in  it  is  idle  till  it  reaches  destination.  On  the 
other  hand,  engines  and  cars  are  unproductive 
when  not  in  motion,  and  the  loss  is  great  unless 
trains  move  safely.  A  thousand  conditions  are 
essential  to  secure  speed  and  safety.  It  is  not 
difficult  to  get  engines  whose  capacity  for  speed 


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will  meet  the  wishes  of  all.  The  obstacles  are  in 
the  track,  in  grades  which  limit  the  speed  of  move- 
ment, in  curves  which  increase  the  distance  to  be 
traveled.  The  nearer  a  track  approaches  a 
straight  and  level  line  the  greater  the  possibilities 
of  success  in  both  speed  and  safety.  But  while  a 
railroad  once  straight  is  always  straight,  a  rail- 
road once  level  is  not  always  level.  Rain,  frost, 
continuous  ^nd  heavy  pounding  of  trains  perpetu- 
ally cause  defects  in  the  track.  These  defects 
must  be  perpetually  repaired  ;  otherwise,  costly 
engines  and  cars  are  injured,  and  liability  to  more 
costly  accidents  ensues.  A  good  track  is,  there- 
fore, the  indispensable  condition  of  success. 

1  have  said  that  engines  and  cars  are  unpro- 
ductive when  not  in  motion.  Their  profit  is  also 
diminished  by  slow  movement;  a  small  amount 
of  equipment,  efficiently  handled,  answers  the 
purpose  of  a  large  amount  inefficiently  handled, 
hi  this  connection,  it  is  also  important  that  cars 
should  be  quickly  loaded  and  unloaded.  The 
daily  mileage  of  a  freight  car  is  an  indication  of 
the  efficiency  with  which  it  is  handled.    A  few 

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years  ago,  the  average  daily  mileage  of  these  cars 
on  certain  railways  was  between  fifty  and  sixty 
miles  ;  on  the  same  railways,  it  has  declined  in 
some  instances  to  between  twenty  and  thirty 
miles.  Part  of  this  reduction  is  due  to  poor  man- 
agement ;  a  greater  part  is  due  to  causes  which 
can  not  be  controlled.  For  want  of  adequate  facili- 
ties at  large  cities  or  terminal  stations,  loaded  and 
empty  cars  are  detained  days  and  even  weeks, 
waiting  to  receive  or  discharge  their  burden. 
This  evil  is  to  some  extent  overcome  by  the  mod- 
ern system  of  demurrage,  under  which  a  nominal 
charge  of  a  dollar  or  two  per  day  is  made  when 
cars  are  detained  beyond  a  specified  time. 

Speed  and  safety  are  not  the  only  requisites  of 
successful  railroad  operation.  It  is  essential  in 
movement  of  freight  traffic,  that  the  greatest  pos- 
sible number  of  tons  should  be  carried  by  each 
train.  I  think  it  may  be  said  that  the  most  inter- 
esting and  complex  problem  in  freight  movement 
is  to  constantly  increase  the  number  of  tons  per 
train  ;  each  train  must  have  one  engine  and  staff 
of  men— engineer,  fireman,  conductor,  brakemen. 


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It  is  easily  seen  that  the  more  freight  this  outfit 
can  safely  carry,  the  greater  is  the  profit.  Ob- 
serve now  what  is  developed  in  order  to  secure 
this  important  result.  Large  engines  take  the 
place  of  smaller  ones ;  a  heavier  load  can  be 
hauled  over  a  light  than  a  heavy  grade  ;  there- 
fore grades  are  reduced  to  the  lowest  possible 
limit.  To  make  this  work  effective,  it  is  some- 
times necessary  to  reduce  only  the  highest,  or,  as 
it  is  called,  the  ruling  grade,  to  attain  the  desired 
level ;  at  other  times,  a  number  of  lighter  grades 
may  be  reduced,  the  number  of  cars  or  tons  per 
train  increased,  and  the  increased  load  carried 
over  the  ruling  grade  by  aid  of  an  extra  engine. 
Sometimes  the  expense  of  reducing  grades  is  so 
great  that  in  view  of  the  amount  of  traffic,  it  is 
not  profitable  to  change  them.  The  expediency 
of  the  proposed  change  is  determined  by  the  civil 
engineer,  who  reports  the  cost  of  the  proposed 
change,  and  the  manager,  who  calculates  what  he 
can  save  by  the  increased  tonnage  per  train.  It 
is  a  pure  question  of  mathematics,  and,  as  I  have 
said,  an  interesting  and  important  one. 


i8 


19 

The  larger  engine  needed  to  haul  heavier  trains 
calls  for  stronger  bridges  and  heavier  rails.  The 
longer  trains  call  for  longer  sidings ;  main  tracks 
are  doubled  and  trebled ;  additional  right  of  way 
must  be  bought,  freight  stations  and  platforms 
must  be  enlarged. 

Time  does  not  permit  a  closer  examination  of 
these  details.  Suffice  it  to  say  the  brightest  minds 
are  ever  on  the  alert  to  devise  new  means  to  in- 
crease the  tonnage  per  train  and  reduce  the  cost 
of  operation  and  maintenanceo  In  this  respect 
the  highest  encouragement  is  afforded  to  students 
of  technical  schools,  like  Purdue  University.  The 
graduate  of  one  of  these  schools,  armed  with  a 
diploma  and  clothed  in  overalls,  can  make  rapid 
progress  in  a  railroad  shop  and  soon  find  a  place 
where  honorable  employment  and  sure  pay  will 
attend  him  as  long  as  health  and  life  are  spared. 
The  maintenance  of  track  is  no  longer,  as  form- 
erly, confided  to  supervisors  who  have  been  used 
to  pick  and  shovel,  and  accustomed  to  work  and 
direct  by  the  rule  of  thumb  or  jolt.  That  most 
important  work  is  now  performed  by  trained  civil 


19 


20 

engineers,  who  bring  to  their  daily  task  the  best 
and  latest  methods  of  their  profession. 

A  railway  company  having  effected  plans  to 
secure  traffic  and  carry  it  cheaply  and  safely, 
mu^t  next  provide  that  the  money  earned  shall 
be  received  and  properly  applied  ;  hence  exist  the 
accounting  and  treasury  departments.  The  former 
tells  whence  every  dollar  of  revenue  should  come 
and  how  it  should  be  applied  ;  the  latter  receives 
and  pays  the  cash. 

The  operations  of  a  railway  are  hardly  less 
destructive  than  those  of  war.  Materials  are 
necessarily  consumed  daily  as  if  they  were  cast 
into  a  fiery  furnace.  In  spite  of  all  precaution 
structures  give  away,  trains  are  wrecked,  prop- 
erty is  injured,  limb  and  life  are  destroyed  ;  wages 
accrue  every  day  ;  interest  on  bonds  grows  every 
day  in  the  week  and  every  hour  of  the  day.  Pay- 
ments on  these  accounts  must  be  made  every  day, 
and  unless  there  is  an  inexorable  system  of  se- 
curing daily  the  money  which  has  been  earned 
the  movement  of  trains  must  cease. 


20 


21 

The  earnings  of  a  railway  company  come  from 
persons  counted  by  tens  and  hundreds  of  thou- 
sands;  classification  makes  the  problem  simple. 
This  army  of  persons  is  made  up  of  passengers, 
shippers  of  freight,  station  agents,  conductors  ; 
also  treasury  officials  who  receive  large  sums  due 
on  interchange  of  business ;  also  on  contracts 
with  other  railway  companies,  express  and  sleep- 
ing car  companies  and  the  government.  Passen- 
gers must  pay  in  advance  for  the  service  they 
receive,  either  in  purchase  of  a  ticket  from  the 
station  agent,  or  in  cash  to  the  train  conductor  ; 
shippers  of  freight  or  consignees  must  pay  for 
freight  carried  before  it  is  delivered  at  destination. 
Conductors  are  required  to  deliver  cash  collected 
at  the  end  of  each  trip ;  station  agents  must  remit 
each  day  the  cash  receipts  of  that  day.  By 
means  of  a  thorough  system  of  accounting  the 
use  of  way  bills,  manifests,  daily  reports,  etc., 
the  accounting  department  can  tell  to  a  dollar  how 
much  money  each  station  agent  or  other  receiv- 
ing agent  of  the  company  should  remit,  and  he  is 
charged  with  that  amount.    Traveling  auditors 


21 


22 

call  often  and  at  unexpected  times  to  examine 
the  accounts  of  agents.  Between  these  calls  it  is 
possible  for  an  agent  to  manipulate  his  accounts,, 
accumulate  a  considerable  sum  of  money  and  run 
aw^y  with  it.  To  protect  the  company  in  cases 
of  this  kind  every  receiving  agent  is  required  to 
give  bond  for  good  behavior.  No  ingenuity  has 
yet  been  able  to  devise  a  perfect  check  on  the 
accounts  of  a  conductor  who  collects  cash  fares, 
on  a  train.  As  railway  systems  become  enlarged 
and  the  magnitude  of  their  operations  attracts 
public  attention,  railway  employes  naturally  ac- 
quire a  higher  sense  of  duty  and  honor.  To  this 
cause  equally  with  the  thorough  organization  of 
the  accounting  department,  which  makes  the  dis- 
covery and  punishment  of  dishonesty  almost  cer- 
tain, is  to  be  attributed  the  success  of  railway 
companies  in  collecting  their  vast  revenues.  Hun- 
dreds of  millions  may  be  involved,  and  not  a  case 
of  embezzlement  occur  in  years. 

The  relation  of  a  law  department  to  a  railway 
company  is  so  apparent  that  it  is  hardly  necessary 
to  define  it.    The  law  holds  railway  companies  ta 


22 


23 

•  a  liigh  degree  of  responsibility,  and  with  few  ex- 
ceptions, makes  them  liable  for  acts  of  their  em- 
ployes, and  for  the  character  and  condition  of 
track,  tools,  machinery  and  equipment.  The 
high  speed  at  which  trains  are  moved  causes 
accidents  to  employes,  passengers  and  people  and 
domestic  animals  on  the  track.  The  movement 
of  heavy  engines  and  cars  in  yards  and  on  side 
tracks,  the  shifting,  coupling  and  uncoupling  of 
cars  in  making  and  dismembering  trains,  is  a  pro- 
lific cause  of  injury  which  can  not  be  avoided. 
In  spite  of  thorough  organization  and  rigid  rules 
for  the  inspection  of  track,  engines,  cars  and  ma- 
chinery, passengers  and  employes  are  injured. 
Freight  is  delayed,  injured,  stolen  or  destroyed. 
Passengers  are  ejected  from  trains.  Defective 
culverts  and  drains  cause  water  to  accumulate  on 
adjacent  land.  Sparks  from  engines  kindle  fire 
in  adjoining  fields;  claims  and  suits  for  damages 
are  always  pending,  based  on  the  accidents  and 
injuries  enumerated.  It  is  the  duty  of  the  law 
department  to  protect  the  company  in  cases  of 
this  kind.    It  also  begins  suits  to  condemn  addi- 


23 


24. 

tional  lands,  to  enforce  the  company's  contracts,, 
to  protect  it  against  unlawful  taxes  and  assess- 
ments threatened  by  city,  township,  county  and 
State  authority.  It  assists  in  prosecution  of  per- 
sons who  have  committed  crime  against  the 
property,  employes  and  patrons  of  the  company. 
It  is  also  called  upon  hourly  to  prepare  contracts, 
deeds,  leases,  mortgages,  and  to  give  advice  to 
officers  and  employes  in  respect  to  their  duties 
and  the  rights  of  the  company.  The  organiza- 
tion of  the  law  department  of  a  railway  company 
depends  on  the  magnitude  of  the  company's  op- 
erations. Usually  there  is  a  general  counsel, 
aided  by  assistants,  clerks  and  stenographers  at 
the  general  offices  of  the  company,  and  the  terri- 
tory in  v/hich  the  railways  of  the  system  are 
situated  is  divided  into  districts,  each  in  charge  of 
a  regular  solicitor.  It  is  the  duty  of  district 
solicitors  to  prosecute  and  defend  in  all  civil 
causes  arising  in  their  respective  districts,  also  to 
attend  coroner's  inquests  when  persons  have 
been  killed  by  trains  ;  also  to  represent  the  com- 
pany before  city,  township  and  county  authorities 


24 


25 

in  matters  where  the  company's  interests  are  the 
subject  of  consideration. 

A  prominent  feature  in  a  modern  railway  sys- 
tem is  the  department  of  claims.  The  destructive 
character  of  the  operation  of  a  railway  creates  so 
many  claims  for  damage  that  it  has  been  found 
expedient  to  establish  a  special  department  to  ad- 
just these  claims.  To  this  department  reports  by 
wire  and  mail  are  promptly  made  of  all  cases  of 
personal  injury  and  death,  in  order  that  experts 
may  at  once  investigate  the  cause  of  the  accident, 
gather  proof,  name  and  address  of  witnesses,  and 
in  cases  where  the  company  is  liable,  arrange 
a  speedy  and  satisfactory  settlement,  hi  many 
cities  there  are  attorneys  who  give  special 
attention  to  what  are  known  as  personal  injury 
and  death  claims  against  railway  companies. 
They  read  newspapers  carefully  to  get  early  in- 
formation of  railroad  accidents.  If  persons  are 
injured  or  killed  they  go  or  send  an  agent  to  the 
injured  person,  or  in  case  of  death,  to  the  house 
of  mourning,  and  offer  their  services  to  bring  suit 
against  the  railway  company.    Sometimes  they 


25 


go  to  the  family  of  a  deceased  person  before  the 
funeral  has  taken  place.  Sometimes  they  begin 
suit  for  damages  in  behalf  of  persons  who  have 
not  employed  them.  It  is  not  surprising  to  know 
tha^t  attorneys  like  these  rob  their  clients  of  from 
one-third  to  one-half  of  all  they  collect,  charging 
for  their  unimportant  services  of  a  few  hours  as 
much  as  an  injured  person  receives  who  spends 
the  remainder  of  his  life  a  cripple,  or  as  much  as 
a  family  receives  which  has  been  bereft  of  a  hus- 
band or  father.  To  guard  against  outrages  of  this 
kind  the  claim  department,  with  its  thoroughly 
equipped  agents,  makes  speedy  investigation  of 
every  accident,  and  in  cases  of  liability  promptly 
tenders  compensation  for  the  injury  it  has  caused. 
By  this  arrangement  those  who  have  suffered  in- 
jury receive  compensation,  avoid  the  exactions  of 
attorneys,  and  the  slow  and  vexatious  course  of 
legal  proceedings.  This  work  is  both  politic  and 
humane,  and  tends  to  relieve  railway  companies 
of  much  of  the  prejudice  which  has  arisen  against 
them. 


26 


27 

I  have  spoken  of  the  classification  of  the  busi- 
ness of  a  railway  system  and  its  distribution 
among  various  departments.  Something  remains 
to  be  said  of  the  general  policy  of  its  management. 
Reference  has  already  been  made  to  the  gradual 
enlargement  of  different  systems  of  railways  ;  the 
large  increase  of  mileage  and  the  vast  amount  of 
capital  involved  in  their  operations.  Several  lead- 
ing railways  have  their  eastern  termini  on  the 
Atlantic  coast  line,  and  extending  westward  across 
several  States,  have  western  termini  on  the  great 
lakes ;  also  on  rivers  which  find  an  outlet  in  the 
Gulf  of  Mexico.  Their  operations  are  subject  to 
control  by  State  and  Federal  authority.  They  are 
in  ceaseless  competition  with  each  other.  Traffic 
of  the  same  kind  moves  in  opposite  directions  on 
the  same  line.  Their  own  traffic  at  one  point  is 
in  competition  with  the  same  kind  of  traffic  at 
another  point.  This  traffic  is  local,  interstate  and 
international,  each  demanding  consideration  pe- 
culiar to  itself.  These  various  lines  are  operated 
on  unequal  conditions.  One  has  the  longest  dis- 
tance ;  another  has  easier  grades ;  a  third  has 


27 


28 

cheaper  fuel  ;  a  fourth  traverses  a  populous  coun- 
try ;  another  has  little  traffic,  except  between 
terminal  stations.  Some  have  no  rival  lines  at 
important  centers  of  trade  ;  others  have  from  two 
to  a  dozen  competitors  at  one  or  more  terminal 
points.  One  company  is  burdened  with  a  heavy 
debt ;  its  rival  has  moderate  interest  charges.  As 
a  result  of  all  these  varieties  of  condition,  the  cost 
of  moving  traffic  is  not  the  same  to  any  two  com- 
panies. Except  on  rare  occasions,  the  supply  of 
railway  service  is  largely  in  excess  of  the  demand. 
Back  of  all  is  the  ever  aggressive  greed  of  the 
large  shipper,  whose  custom  every  railway  wants, 
and  is  given  to  the  railway  which  will  charge  the 
least  for  its  service.  Every  hour  of  the  traffic 
manager's  life  is  afflicted  with  news  that  a  valued 
patron  has  been  persuaded  to  ship  by  another  line, 
or  can  be  retained  only  by  a  deep  reduction  of 
rates,  involving  a  loss  of  revenue  to  the  railway 
company  amounting  to  hundreds,  thousands,  tens 
.  of  thousands  and  even  hundreds  of  thousands  of 
dollars  in  a  single  case.  These  troubles  are  inci- 
dent to  the  mere  acquisition  and  preservation  of 


28 


29 

traffic  ;  they  are  incessant,  corroding  and  destruc- 
tive ;  they  turn  men's  hair  gray,  smite  them  with 
palsy  and  drive  them  to  early  graves. 

In  the  intervals  between  losing  traffic  and  buy- 
ing it  back  at  deadly  cost,  how  is  the  railway  man- 
agement occupied?  Lands  must  be  bought  for 
additional  right  of  way  and  depot  facilities.  Ship- 
pers want  side  tracks  to  their  elevators,  ware- 
houses and  shops  ;  coal  operators,  stone  quarriers, 
furnace  men  want  branch  lines  built ;  connecting 
railways  want  a  joint  use  of  tracks  and  facilities  ; 
weak  holders  of  worthless  railroads  want  to  sell 
them  ;  new  lines  must  be  built  to  protect  those 
already  owned ;  old  employes  want  pensions ; 
myriads  of  outsiders  want  employment;  village 
councils  want  street  crossings  lighted  ;  city  coun- 
cils want  to  pave  streets,  establish  sewers,  secure 
new  railways  and  give  bounties  to  manufacturers, 
largely  at  the  expense  of  railways ;  others  de- 
mand change  of  grade  of  tracks,  elevated  tracks, 
viaducts,  and  sometimes  order  to  destruction  one 
kind  of  improvement  they  have  ordered  to  be 
built,  before  it  is  paid  for,  to  make  way  for  another 


29 


30 

which  will  better  please  their  taste  or  gratify  their 
revenge.  People  along  the  line  want  every  con- 
venience at  stations.  Boomers  of  towns  and  cities 
want  special  train  service.  Lawmakers  want  to 
give  everything  that  is  asked  for  against  railways, 
and  men  in  every  department  of  public  service, 
village,  city,  county.  State  and  Federal,  want  to 
ride  free;  not  all,  but  nearly  all,  and  not  merely 
for  themselves,  but  for  their  families,  friends  and 
companions ;  meanwhile,  old  debts  are  maturing 
and  new  bonds  and  mortgages  must  be  created. 
Current  interest  and  other  obligations  must  be 
met.  No  one  would  expect  that  in  this  increase 
of  burdens  and  decrease  of  income  railways  could 
continue  to  be  solvent.  I  might  with  truth  add 
that,  except  the  security  holders,  no  one  would 
care  ;  and  the  fact  justifies  the  expectation  ;  within 
two  years  last  past  more  than  twenty-five  per 
cent,  of  the  total  railway  mileage  of  the  United 
States  has  been  in  the  hands  of  receivers.  To 
cap  the  climax,  at  a  time  when  railroad  property  is 
most  worthless;  when  more  than  one-half  the 
capital  invested  in  railways  is  unproductive,  there 


30 


31 

are  people  who  want  to  lay  heavier  burdens  upon 
them,  reduce  still  further  their  income,  and  in- 
crease the  taxes  which  are  levied  upon  them. 

The  people  of  the  United  States  are  just,  and  if 
they  know  the  facts,  they  are  not  willing  to  be 
guilty  of  injustice.  They  will  concede  that  capital 
honestly  invested  should  yield  reasonable  income; 
especially  are  they  willing  that  the  man  who 
serves  them  should  be  compensated  for  that  serv- 
ice ;  no  one  will  deny  that  railway  companies  ren- 
der service  to  the  public.  They  carry  people, 
freight,  express,  parcels,  newspapers  and  letters; 
no  inconvenience  can  be  imagined  which  would 
affect  so  large  a  body  of  people  as  that  which 
would  result  if  railway  trains  should  cease  to  move. 
Burdens  imposed  by  Legislatures,  taxes  levied  by 
tax  commissioners  would  not  be  excessive  if  it 
were  known  that  these  burdens  and  taxes  were 
too  severe.  Law-makers  would  not  reduce  the 
income  of  railways,  nor  would  they  forbid  railway 
companies  to  make  arrangements  with  each  other 
to  protect  their  income,  if  they  believed  the  income 
so  protected  were  necessary  to  properly  operate 


31 


32 

and  maintain  these  railways,  and,  in  addition,  yield 
a  fair  dividend  to  stockholders.  The  fact  is  that, 
at  this  time,  one-third  of  all  railway  bonds  in  the 
United  States  are  in  default  of  interest,  and  more 
than  two-thirds  of  all  railway  stocks  yield  no  divi- 
dend. The  aggregate  amount  of  these  bonds  and 
stocks  in  default  is  between  five  and  six  billion 
dollars,  and  every  one  of  the  railways  is  in  opera- 
tion, serving  the  public,  and  more  than  half  of 
them  receiving  no  pay  for  the  service. 

The  blame  of  this  situation  rests  not  wholly  on 
the  public.  The  public  can  no  more  guarantee 
profit  to  all  railways  than  to  all  mills  or  farms. 
Many  railways  were  built,  not  because  they  were 
needed,  but  because  exploiters  wished  to  make 
money  in  building  them.  Others  were  built  in 
good  faith,  but  in  bad  judgment,  hence  predestined 
to  bankruptcy ;  nevertheless,  railways  built  by 
exploiters  and  those  built  by  men  of  bad  judgment, 
no  less  than  those  which  were  built  for  an  honest 
purpose  and  in  good  judgment,  serve  the  public 
unceasingly,  by  carrying  them  and  their  freight, 


32 


33 

their  newspapers  and  their  letters.  What  is  the 
duty  of  the  public  toward  them  ? 

The  first  duty  of  the  public  towards  railways  is 
to  deal  with  them  with  knowledge,  not  in  ignor- 
ance ;  with  reason,  not  in  prejudice.  How  many 
people  know  that  recently  twenty-five  per  cent,  of 
the  entire  railway  mileage  of  the  country  was  in 
bankruptcy  ?  How  many  know  that  one-half  the 
money  invested  in  American  railways  yields  not 
a  cent  to  its  owners  ?  This  knowledge  should, 
and  will  when  it  prevails,  convince  people  that 
railways  are  not  earning  too  much  money.  Many 
people  believe  that  railway  property  is  not  taxed, 
or  if  taxed,  not  taxed  enough.  They  learn  this 
from  newspapers  and  street  talkers.  Go  to  the 
Treasurer's  office  in  any  township,  city  or  county 
in  the  State ;  ask  your  servant,  the  Treasurer, 
what  is  the  fact ;  you  ought  to  be  willing  to  be- 
lieve him.  If  you  think  railway  companies  are 
earning  too  much  money,  go  to  another  high  serv- 
ant of  yours,  the  Auditor  of  State ;  ask  him  to 
tell  you  how  many  railway  companies  in  the  State 
have  been  bankrupt,  how  many  pay  dividends  to 

(3)  33 


34 

stockholders  and  interest  to  bondholders  ;  ask  him 
and  ask  the  Governor  to  tell  you  if  they  think  the 
railways  in  Indiana  earn  too  much  money,  and  if 
they  say  yes,  ask  them  to  specify  what  companies 
they  refer  to,  and  tell  how  much  they  earn  and  how 
much  less  they  ought  to  earn.  In  this  way  you 
will  get  knowledge,  and  no  longer  act  in  ignor- 
ance. 

Prejudice  is  an  intangible,  impalpable,  invisible 
enemy,  most  difficult  to  conquer ;  a  vague  im- 
pression, derived  from  unworthy  or  unreliable 
sources.  The  longer  it  exists  in  the  mind  the 
stronger  it  becomes,  and  as  it  rests  not  in  reason, 
but  wholly  in  ignorance,  you  can  not  assail  it  with 
reason.  There  is  no  hope  for  the  case  unless  it  is 
willing  to  learn  facts  and  become  enlightened. 

A  prejudice  exists  against  railways.  They  are 
feared  because  times  and  conditions  have  consoli- 
dated them  into  large  systems.  But  why  do  you 
fear  a  large  railway  more  than  a  small  railway  ? 
Do  you  think  a  thousand  miles  of  track  under  one 
control  more  formidable  than  a  hundred  miles,  or 
ten  ?  ,  Is  a  long  train  of  cars  more  dangerous  to 


34 


35 

your  liberties  than  a  short  train  ?    Is  a  spacious, 
airy,  well  furnished  car  a  menace  to  your  rights  ? 
Surely  danger  does  not  lie  in  the  number  or  length 
of  rails,  or  trains,  or  the  furnishing  of  a  car.  Do 
you  fear  that  large  railways  will  set  themselves 
above  the  law  or  defy  the  courts  ?    Go  to  any 
Justice  of  the  Peace  in  any  township,  in  any  State 
in  which  is  situated  the  largest  railway  in  America, 
ask  that  Justice  of  the  Peace  if  he  has  any  dif- 
ficulty in  bringing  that  colossal  railway  company 
into  his  little  forum  ;  he  will  answer,    Not  a  bit. 
I  send  the  constable  with  a  little  piece  of  paper, 
telling  the  company  to  come  before  me  and  it 
comes,''    Ask  any  prosecuting  attorney  in  any 
county  in  America  whether  he  has  any  diificulty 
in-  indicting  or  punishing  a  railway  company  or 
employe  for  a  crime?    He  will  tell  you,  '*Not 
any  more  than  in  case  of  individuals.''    Do  you 
fear  the  influence  of  large  railway  companies  more 
than  small  companies  in  corrupting  juries,  public 
officials  and  law  makers  ?    Ask  any  attorney  in 
any  county  in  America  whether  he  knows  of  rail- 
way attorneys  bribing  juries,  or  whether  it  is  dif- 

35 


36 

ficult  for  a  poor  man  to  get  a  verdict  against  a 
great  railway  company  ?  He  will  tell  you  that  it 
is  easier  for  a  camel  to  pass  through  the  eye  of  a 
needle  than  for  a  large  railway  company  to  win  a 
jury  verdict  in  any  kind  of  a  case. 

If  you  fear  large  railway  companies  more  than 
small  ones  in  their  power  to  bribe  public  officials, 
consider  whether  there  is  really  any  difference 
between  the  two.-  A  large  railway  company  has 
no  greater  inclination  to  bribe  than  a  small  com- 
pany. The  value  of  a  local  privilege  which  a 
railway  company  might  wish  to  have,  is  no  greater 
t^  a  large  company  than  to  a  small  one.  Neither 
does  the  vaster  income  or  credit  of  the  large  com- 
pany count  for  more  than  the  smaller  income  of 
the  smaller  company.  If  the  small  company  is 
disposed  to  bribe,  its  smaller  resources  yield  all 
that  is  needed  to  satisfy  the  corruptible  official. 

When  you  have  explored  every  source  of  your" 
fear  of  large  railway  companies,  you  find  at  last 
that  no  greater  danger  is  to  be  apprehended  from 
a  large  than  a  small  company.  Each  is  managed 
by  men  of  about  the  same  stature,  weight,  ability 

36 


37 

and  sentiment,  and  the  resources  of  each  for  the 
attainment  of  its  wishes  or  protection  of  its  rights 
are  equal  to  the  other. 

A  prejudice  exists  against  railway  companies 
under  the  vague  impression  that  railway  stocks 
are  watered,  and  on  this  prejudice  rests  a  demand 
that  railway  rates  be  reduced.  In  other  words, 
it  is  said  the  public  is  forced  to  pay  higher  rates, 
than  it  should,  in  order  that  dividends  may  be 
paid  on  watered  stock.  If  people  will  take  time 
to  learn  the  facts  bearing  on  this  question  they 
will  see  that  their  claim  is  unfounded.  What  are 
the  facts?  First,  70  per  cent,  of  all  American 
railway  stocks  yield  no  dividend  whatever.  Sec- 
ond, the  remaining  30  per  cent,  receives  less  than 
4  per  cent,  per  annum.  Third,  a  considerable 
part  of  this  4  per  cent,  is  not  earned  by  the  com- 
pany, but  is  paid  by  some  other  company,  under 
contracts  made  years  ago,  when  railways  were 
few  and  the  earnings  of  each  railway  were  greater 
than  now.  Fourth,  railway  stocks  are  bought 
and  sold  hourly ;  in  many  cases  the  owner  of  to- 
day was  not  the  owner  of  yesterday.  Now,  bear- 


37 


38 

ing  in  mind  that  the  only  proper  objects  of  wrath 
on  the  part  of  the  public,  in  relation  to  watered 
stock,  are  the  men  who  issued  it — not  the  men 
who  have  since  bought  it — what  conclusion  can 
w6  draw  from  the  foregoing  facts?  First,  that  as 
to  70  per  cent,  of  all  railway  stocks  there  is  no 
just  cause  of  complaint,  whether  watered  or  not, 
because  the  public  does  not  pay  dividends  on  that 
stock;  second,  as  to  the  remaining  30  per  cent, 
on  which  less  than  4  per  cent  dividends  are  paid, 
a  greater  part  of  it  is  paid,  not  because  it  is 
earned,  but  because  there  is  a  contract  which  re- 
quires it  to  be  paid.  And,  finally,  there  is  no 
certainty,  if  railway  rates  should  be  reduced,  and 
thereby  reduce  the  dividend  which  is  paid  on  one- 
third  of  the  railway  stocks  from  less  than  4  to  less 
than  3  or  less  than  2  per  cent.,  that  the  blow 
would  fall  on  those  guilty  of  issuing  watered  stock. 
Therefore  if  the  people  reduce  railway  rates  on 
account  of  watered  stock,  they  act  like  a  blind 
giant  who  swings  a  club  in  a  crowd  in  his  aim  to 
strike  one  man  by  whom  he  has  been  hurt. 


38 


39 

Certain  railway  stocks  have  been  watered ; 
other  stocks  are  thought  to  be  watered,  but  in 
fact  are  not ;  still  other  stocks  are  not  watered, 
and  are  not  supposed  to  be.  Let  the  people  know 
the  situation  and  they  will  be  fair. 

First,  When  boomers  build  railways — not  to 
operate,  but  to  sell — they  proceed  as  stated  above. 
They  give  a  block  of  stocks  and  bonds  to  them- 
selves as  pay  for  building  a  railway.  The  amount 
of  these  stocks  and  bonds  has  no  reference  to 
the  cost  of  the  railway.  If  the  cost  of  con- 
struction and  equipment,  honestly  incurred,  ex- 
ceeds the  amount  of  stocks  and  bonds  issued, 
then  there  is  no  water  in  either  stocks  or  bonds. 
Such  a  mistake  on  the  part  of  the  boomers  has 
never  been  heard  of.  Usually  (always  so  far  as 
is  known)  they  issue  stocks  and  bonds  largely  in 
excess  of  the  cost  of  building  and  equipping  the 
road.  This  excess  is  water,  and  dirty  water  too. 
To  avoid  being  injured  by  it,  the  public  need  not 
rob  all  railway  companies  who  have  acted  in  good 
faith.  They  can  correct  the  evil  by  changing  the 
law,  which  permits  anybody  to  build  a  railroad 


39 


40 

anywhere,  and  make  the  building  of  a  railroad  a 
question  of  public  necessity,  to  be  determined  by 
disinterested  public  officials.  Township  roads, 
county  roads,  city  streets,  are  not  opened  through 
private  property  nor  cast  upon  the  public  for  re- 
pairs, except  on  petition  of  certain  persons  and 
their  necessity  approved  by  proper  public  officials. 
Next,  before  anybody  is  allowed  to  build  a  rail- 
way, he  should  file  in  some  public  department 
sworn  estimates  of  its  cost,  and  be  compelled, 
under  heavy  penalties,  to  limit  the  issue  of  stocks 
and  bonds  to  its  actual  cost.  Under  such  law  we 
would  have  no  watered  railway  stock. 

Second,  When  are  railway  stocks  supposed  to 
be  watered,  but  are  actually  not  watered.?  I 
answer,  when  such  stocks  are  based  on  extensions 
and  additions  to  an  existing  railway,  and  are  paid 
for  at  cost  out  of  earnings. 

A  railway  is  built  from  A  to  B  ;  it  has  cost  ten 
million  dollars,  honestly  expended,  for  which  five 
million  in  bonds  and  five  million  in  stocks  have 
been  issued.  No  one  complains  of  that.  The 
railway  begins  operations,  increasing  traffic  de- 


40 


41 

mands  additional  tracks,  lands  and  cars.  Where 
shall  the  money  be  got  to  pay  for  these  necessary 
additions?  If  additional  bonds  are  offered  at  that 
early  stage,  they  will  sell  at  so  low  a  figure  that  it 
is  not  wise  to  make  the  attempt.  The  stockhold- 
ers, at  that  early  period,  are  not  disposed  to  sub- 
scribe additional  stock  and  pay  in  more  money. 
If  they  were  willing  so  to  do,  the  most  rabid  enemy 
of  railways  would  not  complain  of  it.  What  then 
is  to  be  done?  The  public  clamors  for  increased 
facilities.  It  is  not  wise  to  sell  bonds  at  a  discount ; 
stockholders  are  not  able  or  willing  to  make  further 
advances  of  cash,  but  they  are  willing  to  do  some- 
thing else  which  enables  the  public  to  have  the 
increased  facilities  it  demands.  They  say  to  the 
Directors  of  the  company,  make  these  desired 
improvements  and  pay  for  them  out  of  surplus 
earnings  ;  meanwhile  we  will  ask  for  no  dividends. 
Five  or  ten  years  of  this  policy  continues,  and  at  the 
end  of  the  period,  ten  additional  million  dollars  have 
been  expended  and  the  railway  is  worth  double  what 
it  was  at  first.  The  stockholders  now  say,  we  will 
take  ten  millions  of  stock  to  represent  that  addi- 


41 


42 

tional  value.  Can  stock  so  issued  be  called  watered 
stock  ?  Certainly  not.  Why  ?  The  public  needed 
the  additional  facilities  ;  after  they  were  made,  the 
capacity  of  the  road  to  do  business  and  accommo- 
date the  public  was  doubled,  and  the  value  of  the 
property  was  doubled.  If  stockholders  had  sub- 
scribed for  additional  shares  and  paid  for  it  monthly 
or  quarterly  as  the  work  of  extension  proceeded, 
nobody  would  have  thought  of  complaining  ;  or,  if 
stockholders  had  drawn  from  the  company  divi- 
dends, and  at  once  turned  those  dividends  back  to 
the  company  and  received  stock  for  it,  no  one 
would  have  complained.  What  difference  then,  is 
it  to  the  public,  whether  the  stockholder  draws 
dividends  and  converts  it  into  stock,  from  time  to 
time,  or  allows  all  surplus  earnings  to  be  applied 
to  the  work  of  extension  and  takes  his  share  of 
stock  for  the  cost  of  the  extensions,  when  the  same 
are  completed. 

1  will  admit  that  no  additional  stock  should  be 
issued  to  represent  an  increased  value  of  the 
railway,  caused  by  lapse  of  time  or  increase  of  busi- 
ness.   The  public  has  a  right  to  share  that  increase 


42 


43 

with  the  stockholder.  The  right  to  issue  addi- 
tional stock  should  rest  on  the  fact  of  additional 
cash  put  into  the  property  to  increase  its  ability 
to  serve  the  public.  If  stock  issues  are  restricted 
to  these  limits,  the  people  will  not  complain  of 
watered  stock,  and  they  can  protect  themselves 
fully  in  this  respect,  and  innocent  stockholders  as 
well,  if  they  will,  under  heavy  penalty,  limit  the 
issue  of  bonds  and  stock  to  cost  of  the  railway  and 
additions  and  to  pay  debts  which  can  not  other- 
wise be  paid. 

This  brings  us  to  a  phase  of  the  question  not 
often  discussed,  yet  important  to  be  understood. 
It  is  clear  that  a  sound  policy  requires  that  stock 
and  bond  issues  of  a  railway  company  should  be 
limited  as  far  as  possible  to  cost  of  the  property, 
but  experience  has  shown  that  railway  companies, 
in  spite  of  good  management,  will  fall  in  debt. 
These  debts  must  be  paid  in  cash,  stock  or  bonds, 
hence  the  law  has  permitted  stock  and  bonds  to  be 
issued  in  payment  of  debts.  Large  amounts  of 
stock  have  been  issued  in  this  way.  A  railway 
company  becomes  insolvent  and  is  reorganized. 


43 


44 

Its  old  stockholders  cling  to  the  faith  that  some 
day  in  the  future,  the  stock  will  have  value,  hence 
they  want  to  be  represented  in  the  new  company. 
For  a  better  reason,  bondholders  whose  interest 
for  ;  years  has  not  been  paid,  want  something  to 
represent  their  unpaid  interest,  and  are  entitled  to 
a  place  ahead  of  stockholders,  and  they  receive 
income  bonds  or  preferred  stock  in  payment  of 
their  unpaid  interest.  Thus  a  reorganized  com- 
pany begins  its  career  with  a  large  amount  of 
stock,  and  the  suspicion  of  the  public  is  aroused 
against  it.  The  cases  are  exceptional  and  should 
receive  particular  treatment.  To  compel  all  rail- 
road companies  to  reduce  their  rates  because  some 
companies  have  issued  fictitious  stock,  and  others 
have  issued  stock  in  payment  of  debts,  would  be 
like  putting  a  whole  town  in  jail  because  one  in- 
habitant was  a  thief.  The  newspaper  editor, 
the  platform  lecturer,  the  State  or  National  law 
maker,  who,  in  general  terms,  denounces  railway 
companies  for  issuing  watered  stock,  is  guilty  of 
gross  calumny  against  the  railways  of  the  United 
States,  and  does  great  wrong  to  hundreds  of 


44 


thousands  of  innocent  people.  We  do  not  de- 
nounce all  editors  because  some  are  blackmailers  ; 
we  do  not  condemn  all  lecturers  because  a  few 
are  ignorant  and  rash ;  we  do  not  call  all  law 
makers  criminals  because  some  are  bribe  takers  ; 
we  do  not  say  the  human  race  are  assassins  be- 
cause some  of  them  are  murderers.  We  should 
not  charge  railway  companies  with  swindling  the 
public  because  a  few  companies  have  issued  ficti- 
tious stock.  Let  there  be  light  on  this  subject, 
and  the  people  will  be  just  to  railway  companies. 

Hostility  to  railway  companies  exists  mainly 
because  they  do  not  give  uniform  rates  to  the 
public,  and  sometimes  charge  more  for  a  short 
than  a  longer  haul  in  the  same  direction,  hi 
other  words,  it  is  said  they  favor  certain  shippers 
at  the  expense  of  others.  Railway  companies 
derive  all  their  powers  from  the  public  ;  they  are 
created  for  the  purpose  of  serving  the  public, 
therefore  it  seems  odious  that  they  should  give 
lower  rates  to  one  part  of  the  public  than  to 
another.  Laws  are  enacted  to  prevent  this  dis- 
crimination, and  require  rates  to  be  alike  to  alL 


45 


46 

The  companies  evade  these  laws  by  charging 
uniform  rates  and  giving  a  portion  back  to  fa- 
vored shippers  by  way  of  rebates,  drawbacks 
and  other  devices.  Then  other  laws  are  enacted 
to  prevent  the  companies  from  giving  back  any 
portion  of  the  rate,  by  any  kind  of  payment  or 
favor,  and  these  laws  in  turn  are  disobeyed. 
Every  one  knows  this  to  be  the  situation  in 
respect  to  every  railway  company,  the  result  be- 
ing that  all  companies  are  conspicuous,  persist- 
ent, defiant  law  breakers.  No  wonder  they  are 
scourged  by  juries,  law  makers,  tax  commission- 
ers and  public  opinion.  Why  then  do  railway 
companies  persist  in  a  course  which  makes  them 
all  criminals  and  brings  the  majority  of  railways 
to  bankruptcy  ? 

.  Public  opinion  rests  on  the  single  fact  that  rail- 
way companies  are  law  breakers ;  no  inquiry  is 
made  why  railway  managers  break  the  law,  or 
whether  the  law  is  just.  Possibly  an  investiga- 
tion will  show  that  law  makers  as  well  as  law 
breakers  are  at  fault. 


46 


47 

Although  the  people  give  corporate  life  and 
power  to  railway  companies,  they  do  not  furnish 
the  money  to  build,  equip  and  maintain  railways. 
This  money  is  furnished  by  private  individuals. 
A  railway,  therefore,  is  private  property  devoted 
to  a  public  use.  Nothing  can  be  more  just  than 
that  this  private  property  devoted  to  a  public  use 
should  be  allowed  to  yield  some  profit  to  its  own- 
ers, and  at  least  to  protect  itself  from  insolvency. 
This  proposition  is  not  fully  nor  fairly  met  by  the 
counter  proposition  that  railway  charges  should 
be  uniform  to  the  public,  unless  a  reasonable 
interpretation  is  given  to  the  phrase  uniform 
charges.''  What  then  are  the  rights  of  the  public 
in  respect  to  a  railway  ?  What  is  meant  by  uni- 
form charges  ?  What  are  the  rights  of  a  railway 
company  in  respect  to  earning  money  ? 

Take  the  case  of  a  railway,  built  from  Chicago 
to  the  seaboard.  The  people  of  Illinois,  Indiana 
or  Michigan,  Ohio,  Pennsylvania  or  New  York, 
and  of  New  Jersey  have  united  in  giving  corporate 
life  and  powers  to  this  railway  company.  Each 
State  expects  to  be  benefited  by  the  existence  of 


47 


48 

the  railway.  Next,  there  are  many  cities,  towns 
and  hamlets  in  each  State,  along  the  line  of  this 
railway.  Some  of  these  places  enjoy  the  advan- 
tage of  competing  railway  or  lake  or  river  service  ; 
others  have  not  this  advantage.  None  of  these 
places  are  exactly  alike  in  the  conditions  of  labor, 
materials,  workmen  or  capital.  The  situation  is 
further  complicated  by  the  existence  of  several 
other  railways  built  from  Chicago  to  New  York, 
each  on  a  different  route,  each  under  conditions 
different  from  either  of  its  rivals.  The  laws  of 
the  different  States  between  Chicago  and  the  sea- 
board limit  the  rate  which  railway  companies  may 
charge  for  their  services  ;  that  is,  they  prescribe 
the  maximum  rate.  None  of  these  States  fix  a 
minimum  rate  ;  the  theory  of  the  law  on  this  point 
is,  that  railway  companies  might  charge  too  high 
a  rate  if  not  restricted,  but  there  is  no  danger  of 
their  charging  too  low  a  rate ;  hence,  while  the 
law  prescribes  a  maximum  rate,  it  does  not  pre- 
scribe a  minimum  rate. 

The  omission  of  law  to  fix  a  minimum  rate  jus- 
tifies the  public  in  assuming  it  is  at  liberty  to  get 


48 


49 

as  low  rates  as  it  can,  and  justifies  the  companies 
in  assuming  that  they  may  lower  rates  as  much 
as  they  please/  Thus  the  public  gets  the  benefit 
of  competition,  which  every  one  concedes  it  has  a 
right  to  get.  But  railway  companies  naturally 
wish  to  get  all  they  can,  and  never  reduce  the 
rate  except  under  compulsion.  Hence,  they  main- 
tain rates  where  they  have  no  competition,  and 
lower  rates  where  they  have  competition. 

The  right  of  the  public  to  get  as  low  rates  as  it 
can  applies  to  every  station  on  a  railway ;  and  in- 
asmuch as  the  conditions  which  induce  a  railway 
company  to  lower  its  rates  are  not  the  same  at  all 
stations,  it  is  impossible  that  rates  should  be  uni- 
form at  all  stations.  Where  competition  exists, 
the  public,  in  the  exercise  of  its  undoubted  right, 
will  secure  lower  rates  than  at  points  where  there 
is  no  competition.  To  force  a  railway  to  make  a 
uniform  rate  at  all  stations,  would  be  to  give  to 
some  communities  advantages  to  which  they  are 
not  entitled,  and  to  deprive  other  communities  of 
advantages  they  have  rightfully  acquired.  It  is 
not  the  duty,  nor  is  it  in  the  power  of  a  railway 


(4) 


49 


50 

company  to  equalize  conditions  between  different 
communities.  The  right  of  a  railway  company  to 
lower  its  rates  at  competitive  points  is  inseparable 
from  the  right  of  the  public  to  get  as  low  rates  as 
it  can.  And  if  it  be  conceded  that  in  the  absence 
of  law  fixing  a  minimum  rate  which  a  railway  may 
charge,  the  public  has  a  right  to  as  low  rates  as  it 
can  get,  the  conclusion  is  inevitable  that  a  railway 
company  which  charges  different  rates  at  different 
stations  is  not  guilty  of  discrimination. 

This  argument  does  not  apply  to  different 
patrons  at  the  same  station.  The  rights  of  all 
members  of  the  public  at  any  given  point  are 
identical.  If  rates  are  lowered  to  one  they  should 
be  lowered  to  all.  Though  one  patron  ships  ten 
tim.es  as  much  at  one  station  as  another  patron, 
the  rights  of  the  public  at  that  station  are  the 
same,  and  what  the  railway  does  for  one  it  should 
do  for  all. 

This  right  of  the  public  to  have  as  low  rates  as 
it  can  get  is  the  source  of  all  complaints  against 
railways  on  account  of  discrimination.  At  com- 
petitive points  the  railway  company  lowers  the 


50 


51 

rate  under  compulsion  ;  it  makes  the  best  bargain 
it  can,  and  the  result  is  all  shippers  are  not  served 
alike.  In  all  these  cases  of  so-called  discrimina- 
tion, whether  at  competitive  or  non-competitive 
points,  the  railway  traffic  manager  acts  precisely 
as  the  merchant  and  manufacturer  does  under 
like  circumstances.  He  reduces  the  price  to  those 
who  buy  largely ;  he  sells  at  little  or  no  profit, 
rather  than  lose,  a  customer. 

The  public  wishes  to  have  as  low  rates  as  it 
can  get;  it  knows  the  more  railways  are  built  the 
lower  will  be  the  rates;  therefore  it  wishes  as 
many  railways  as  can  be  built.  At  this  point  the 
public  stops  wishing  and  thinking,  and  begins  to 
smite  railways  because  of  discrimination.  It  fails 
to  see  that  competition  and  discrimination  are  in- 
terchangeable terms.  It  passes  laws  to  prevent 
discrimination,  and  with  incredible  folly  passes 
other  laws  forbidding  railway  companies  to  do  the 
only  thing  that  can  prevent  discrimination,  to  wit, 
make  arrangements  between  themselves  to  main- 
tain uniform  rates  and  compensate  each  other  by 
division  of  traffic  or  earnings,  a  subject  in  which 


51 


52 

the  public  has  no  conceivable  interest  what- 
ever. 

Why  are  the  words  competition and  dis- 
criminationinterchangeable  terms  ?  Competi- 
tion is  a  condition  resulting  from  the  presence  of 
two  or  more  rival  railway  lines.  Discrimination 
is  a  condition  under  which  different  individuals  in 
the  same  community  do  not  get  the  same  rates 
from  railway  companies ;  neither  one,  two  or 
three  of  the  rival  lines  can  do  all  the  business  at 
the  competitive  point ;  each  line  will  and  must  get 
a  share  of  the  business.  The  conditions  under 
which  the  various  rival  lines  are  maintained  and 
operated  are  not  alike  in  any  two  cases.  There- 
fore the  rates  they  can  each  afford  to  accept  are  not 
the  same  in  any  two  cases.  And  inasmuch  as  no 
single  company  can  do  all  the  business,  leaving 
the  others  to  starve,  a  different  scale  of  rates 
charged  by  each  company  is  the  inevitable  result. 
Thus  we  find  discrimination  to  be  the  inevitable 
concomitant  of  competition  ;  for  the  result  to  the 
public  is  precisely  the  same,  whether  one  railway 
company  gives  a  different  rate  to  each  of  its 


52 


53 

patrons,  or  whether  half  a  dozen  different  com- 
panies give  different  rates  to  the  public.  The  result 
in  either  case  is  that  all  shippers  at  competitive 
points  are  not  treated  alike. 

Certain  railways  can  afford  to  accept  a  less  rate 
than  other  less  favored  lines.  The  less  favored 
lines  must  have  a  portion  of  the  traffic,  for  small 
profit  is  better  than  none.  Here  begins  scramble 
for  traffic  and  demoralization  of  rates.  No  rail- 
way company  will  quietly  lie  down  and  die. 
Neither  public  opinion  or  penal  statutes  will  pre- 
vent its  managers  from  trying  to  get  traffic  and 
continue  to  do  business.  In  this  pell-mell  scram- 
ble for  traffic  the  public  is  robbed  and  the  railway 
companies  are  ruined.  The  business  of  large  ship- 
pers is  sought  after  and  secured  at  any  price. 
Smaller  shippers  do  not  get  as  good  rates  as  the 
larger,  and  the  result  is  that  small  dealers  are 
driven  out  of  business  and  larger  dealers  increase 
their  power  and  wealth.  Even  the  large  dealer  is 
not  wholly  at  fault  in  this  carnival  of  ruin.  The 
competition  which  affects  the  railv/ays  affects  the 
different  merchants   and  manufacturers.  Each 


53 


54 

must  meet  his  rival  in  the  field  of  trade  on  equal 
terms  and  get  the  lowest  possible  rate  for  trans- 
portation. Unrestrained  competition  crushes  and 
grinds  as  remorselessly  as  the  wheels  of  Jugger- 
naut. 

If  railway  companies  were  permitted  to  make 
arrangements  with  each  other  for  division  of  traffic 
or  earnings,  the  destructive  results  of  competition 
could  be  largely  obviated.  Hitherto  the  public 
mind  has  associated  such  arrangements  with  the 
idea  of  pools  and  monopolies,  and  forbidden  rail- 
way companies  to  make  them  under  heavy  pen- 
alties. Nine  years  ago  Congress  prohibited  pool- 
ing of  railway  earnings  or  tonnage,  thinking 
thereby  to  secure  unrestricted  competition  and 
prevent  discrimination.  It  did  not  understand  that 
unrestricted  competition  meant  unlimited  discrim- 
ination. The  country  has  never  known  such  de- 
moralization of  railway  rates,  dissatisfaction  of 
shippers  and  bankruptcy  of  railway  companies  as 
since  the  passage  of  the  interstate  commerce  law. 

If  railway  companies  were  permitted  to  make 
and  enforce  agreements  among  themselves  rela- 

54 


55 

tive  to   a  division  of  earnings  or  traffic,  they 
could  secure  uniformity  and  stability  of  rates,  and 
the  public  would  be  entirely  safe  against  exorbitant 
rates.    Each  State  controls  the  maximum  rate 
which  a  railway  company  may  charge  for  the 
transportation  of  passengers  and  freight.  That 
maximum  rate  can  be  lowered  at  the  will  of  every 
Legislature.    If  railway  companies  should  agree 
upon  a  rate  which  the  public  deems  unreasona- 
ble, the  remedy  is  in  the  hands  of  the  Legislature 
to  reduce  the  maximum.    Whatever  rate  the  law 
permits  to  be  charged  is  presumed  to  be  reason- 
able, and  no  harm  can  come  to  the  people  if  rail- 
way companies  are  permitted  to  agree  upon  a  rate 
which  is  equal  to  or  less  than  the  rate  which  the 
law  declares  reasonable.     If  railway  earnings 
becom.e  too  large  under  the  operation  of  pooling 
contracts,  let  the  maximum   rate   be  further 
lowered,  and  railway  earnings  will  at  once  di- 
minish. 

A  railway  pool  differs  from  a  pool  of  manufac- 
turers or  producers  in  this :  The  public  can  not 
control  the  price  which  private  persons  may  charge 

55  ^ 


56 

for  what  they  produce,  hence  a  pool  or  monopoly 
of  producers  may  force  prices  up  to  an  extravagant 
figure  ;  but  the  public  does  and  always  will  control 
the  price  of  transportation,  and  no  railway  com- 
pany win  dare  to  charge  above  the  maximum  rate 
which  is  fixed .  by  law.    Many  people  think  de- 
moralization of  rates  and  bankruptcy  of  railways 
would  cease  if  railway  traffic  managers  were  hon- 
est and  wise.    They  do  not  understand  the  situa- 
tion.   First,  while  a  majority  of  traffic  managers 
are  both  honest  and  wise,  all  are  not  so,  and  one 
foolish,  dishonest  traffic  manager  can  bring  con- 
fusion to  the  whole  situation.    Second,  if  all  were 
honest  and  wise,  they  could  do  nothing  without 
concert  of  action,  and  this  concert  of  action  is  for- 
bidden by  law.    Railway  companies  are,  there- 
fore, by  public  opinion  and  statute  law  condemned 
to  destruction  and  forbidden  to  make  any  effort  to 
save  themselves.    The  situation  is  precisely  as  it 
would  be  if  a  community,  made  up  of  wise  and 
ignorant,  virtuous  and  vicious,  honest  and  dis- 
honest people,  were  by  a  higher  power  prevented 
from  passing  laws  and  establishing  courts  for  mu- 


56 


.  57 

tual  protection,  and  thus  left  to  prey  upon  each 
other,  like  savages  in  a  wilderness.  Any  kind  of 
despotism  is  more  tolerable  than  such  a  state. 

It  is  noted  with  pleasure  that  public  opinion  is 
changing  on  the  subject  of  railway  pools.  Those 
who  are  capable  of  learning  facts,  and  can  under- 
stand the  truth  which  those  facts  convey,  are  no 
longer  opposed  to  a  law  which  will  allow  railway 
companies  to  make  reasonable  contracts  with  each 
other  for  division  of  traffic  or  earnings.  The 
ignorance  of  law-makers  on  this  subject  has  caused 
stupendous  disaster  to  individual  and  corporate 
fortunes.  It  is  hoped  that  the  dawning  of  a  better 
day  is  at  hand. 

Railway  companies  being  created  by  law  and 
regulated  by  law,  their  oificers  and  employes  are 
in  constant  touch  with  servants  of  the  people  who 
make,  interpret  and  enforce  the  law.  The  temp- 
tation is  great  to  give  and  receive  money,  in  mat- 
ters wherein  the  interests  of  the  railways  are  in 
conflict  with  those  of  the  public.  Some  railway 
managers  are  willing  to  pay  the  price,  and  some 
officials  are  willing  to  betray  the  public.  Happily, 


57 


58 

these  are  in  the  minority.  Under  our  modern 
-  system  of  law,  which  forbids  the  granting  of  cor- 
porate privilege  by  special  statute,  the  railway 
companies  are  seldom  in  legislative  halls  except 
under  compulsion,  to  try  to  protect  themselves 
against  threatened  injury. 

There  are  men  who  make  a  living  by  work  in 
shops,  fields  and  mines.  There  are  other  men 
who  make  a  living  by  working  legislative  bodies. 
They  gather  at  the  State  Capitol  as  buzzards 
gather  about  a  carcass.  Usually  they  have  served 
one  or  two  terms  in  a  Legislature,  and  learned  in 
the  mysteries  of  law  making.  They  soon  know 
what  members  are  there  to  serve  the  public,  and 
who  are  there  to  serve  themselves.  This  is  fact 
number  one.  The  next  factor  on  which  they 
count  is  the  fear  of  corporation  officials  that  laws 
will  be  enacted  increasing  the  burdens  on  corpora- 
tions. The  third  stage  is  the  introduction  of  bills 
to  increase  taxes,  impose  severe  regulations  or  re 
duce  income  of  corporations.  This  blackmailing 
process  is  aimed  at  all  manner  of  corporations, 
railway,  express,  sleeping  car,  telegraph,  insur- 


58 


59 

ance  and  loan  associations.   Sometimes  the  officers 
of  tliese  corporations  are  cowards  and  think  it 
necessary  to  pay  promptly  the  ransom  demanded 
by  legislative  brigands  ;  others  whom  long  experi- 
ence in  the  business  has  made  familiar  with  these 
operations,  pay  the  tribute  as  the  easiest  way  out 
of  trouble  and  regard  the  exaction  as  one  of  the 
elements  of  modern  civilization  ;   a  third  class 
have  faith  in  the  principles  of  honesty,  trust  to 
the  people  for  fair  play,  and  by  proper  presenta- 
tion of  arguments  and  facts,  defy  the  blackmailers 
and  defeat  their  schemes.    Corporation  officials 
who  act  in  this  way  seldom  fail  to  protect  the 
companies  they  represent  to  the  full  extent  to 
which  they  are  entitled  to  protection,  but  as  long 
as  some  officials  are  willing  to  pay  tribute,  so  long 
the  system  of  legislative  corruption  continues,  and 
all  railway  companies  are  denounced  by  the  people 
as  partners  in  the  crime.    The  same  influences, 
but  to  a  very  limited  extent,  prevail  in  the  action 
of  Tax  Commissioners.    Prosecuting  attorneys, 
sheriffs,  auditors  and  coroners  are  in  position  to 
help  or  hurt  a  railway  company.    Their  opera- 

59 


6o 

tions  are  mainly  characterised  by  a  sense  of  jus- 
tice, but  often  they  are  willing  to  give  and  receive. 

In  presenting  these  facts  to  the  young  men 
before  me,  many  of  whom  will  probably  some  day 
be  called  to  railway  service,  and  all  of  whom  wish 
to  become  upright  citizens,  1  wish  to  emphasize 
the  following  truths  : 

Railway  employes  are,  in  a  certain  sense,  serv- 
ants of  the  public  ;  the  manner  in  which  they  dis- 
charge their  duty  has  much  to  do  with  the  welfare 
of  the  public.  Let  that  duty  be  performed  with 
courage,  but  always  in  the  desire  to  do  justice  to 
the  public,  no  less  than  the  company  they  serve. 
When  the  public  learns  that  railway  officers  and 
employes  are  animated  by  this  sense  of  duty  and 
of  justice,  prejudice  against  railways  will  disap- 
pear; the  burdens  which  are  laid  upon  them  will 
be  reasonable;  the  fetters  which  bind  them  to 
disaster  will  be  removed. 


60 


